Exploring the Effects of China's Two-Tier Board System and Ownership Structure on Firm Performance and Earnings Informativeness

43 Pages Posted: 20 Mar 2008

See all articles by Stella P.L. Cho

Stella P.L. Cho

Hong Kong Polytechnic University - School of Accounting and Finance

Oliver M. Rui

China Europe International Business School (CEIBS)

Date Written: 2007

Abstract

This study empirically explores whether, and how, selected attributes of China's two-tier board system affect Chinese firms' performance and earnings informativeness. Using a data base of 4623 firm-year observations over the 1999 to 2003 period, we find some effects that mirror ones reported in non-Chinese settings, such as positive correlations between firm performance and the proportion of independent Board of Directors (BoD) members and the frequency of Supervisory Committee (SC) meetings; as well as positive correlations between earnings informativeness and the proportions of independent BoD and SC members. Significant effects also are found for concentrated non-state ownership and existence of foreign shareholders. These exploratory findings provide impetus for further research in the Chinese setting, the findings of which may help refine general knowledge on the role of corporate governance.

Keywords: Corporate Governance, Firm Performance, Informativeness of Earnings, China's

JEL Classification: G12, G15, M41, M47, G32, G34

Suggested Citation

Cho, Stella P.L. and Rui, Oliver M., Exploring the Effects of China's Two-Tier Board System and Ownership Structure on Firm Performance and Earnings Informativeness (2007). Available at SSRN: https://ssrn.com/abstract=1111424 or http://dx.doi.org/10.2139/ssrn.1111424

Stella P.L. Cho

Hong Kong Polytechnic University - School of Accounting and Finance ( email )

M715, Li Ka Shing Tower
Hung Hom, Kowloon, Kowloon
Hong Kong

Oliver M. Rui (Contact Author)

China Europe International Business School (CEIBS) ( email )

699 Hong Feng Road
Pudong
Shanghai 201206
China
86-21-28905618 (Phone)
86-21-28905620 (Fax)

HOME PAGE: http://https://www.ceibs.edu/rui-oliver

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